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Globalization affects everyone — even small businesses. Now that consumers can access digital options from companies all around the world, business owners are up against a much broader range of competitors.
Even local companies that sell physical goods are open to disruption. Hometown stores didn’t see businesses like DoorDash or Postmates on the horizon, but now customers who prefer products from the store down the road can press a button to summon their favorite goods. Instead of boosting their income, delivery apps are putting some local eateries out of business.
From the corner store to the corporation, no one is safe from the globalized economy. Just because the world is more connected doesn’t mean cultural distinctions have blurred, however. Companies that want to compete on the world stage must understand and respect the way rules and expectations shift across borders.
Don’t expand into unfamiliar territory without taking a few precautionary steps:
Respect local customs.
An American coffee company that decides to expand to Italy could easily flounder without a new strategy. While Americans drink all sorts of coffee-based treats throughout the day, Italians are particular about when, where, and how they enjoy their drinks.
Coffee is an easy example, but some customs are far less obvious. Eric Rozenberg, president of Event Business Formula and the first non-American chair of Meeting Professionals International, has experienced these differences firsthand in the course of his business travel to more than 50 countries. While he’s now based in the U.S., he ran into a bit of trouble during an earlier visit to the States. When a colleague invited him to play golf, he offered to caddy instead because he didn’t have a golf license, which is required to play in Belgium.
“It was so apparent to me that you needed to have a golf license,” said Rozenberg. “This story is an excellent example of how unseen cultural rules in your client’s organization or in another country you’re working with might create funny surprises at best, [or] some challenges at worst.”
Before doing business in a new place, study the basics of respect and etiquette. Locals usually forgive honest efforts, but they won’t tolerate businesses that trample local customs in search of profit. Be ready to listen and adjust to set the stage for long-term success in new markets.
Get familiar with taxes and regulations.
Nothing takes the air out of a new venture like an unpleasant call from a regulatory agency. Before declaring open season in a new market, diligently research how the company’s liability (financial and otherwise) could change in the new environment.
American companies handling European consumer data, for instance, are now subject to the rules outlined in GDPR — regardless of whether those companies operate in Europe. Some U.S. states, like California and Delaware, have stern new rules on the books regarding consumer data protection.
Perhaps no laws are more important than tax laws. Regulatory agencies might give offending companies a second chance, but tax authorities always want their cut. Consult with local accountants and attorneys in the target region (or domestic experts who specialize in the laws of those areas) to avoid unnecessary setbacks.
Budget for unexpected logistical issues.
Cultural norms bleed into business operations in strange ways. Americans often treat business deals impersonally, but in many European or Asian countries, detached professionalism can easily come across as rudeness or arrogance. Trains and deliveries are always on time in Japan, but Spaniards might not be as fastidious about the details.
Leave room in the budget to handle unexpected hurdles. Delays, surprise fees, and other costs of doing business don’t always make themselves obvious from the beginning. Transport between regions in other countries might be subject to taxes that would baffle Americans. For a company selling physical goods, such costs could be devastating.
In countries where bribes are the norm, don’t start handing out envelopes full of cash without doing a little prep work. U.S. laws forbid outright bribes to foreign officials. However, companies have legitimate options to fulfill cultural expectations without landing in legal hot water. Consult both local experts and domestic attorneys to cover all your bases. If anything you’re expected to do doesn’t fit with your moral compass, pause to consider what’s most important in terms of building a strong business: your bottom line or your principles.
Globalization might mean increased competition, but competition works both ways. Small businesses facing unfamiliar terrain can capitalize on ripe markets anywhere in the world. With a strong strategy and a willingness to learn, anyone can turn domestic success into an international platform.
December 20, 2018 at 01:09PM
Forbes – Entrepreneurs